The Ministry of Finance of Sri Lanka has announced suspension of payments on all external liabilities of the country, according to a statement released by the ministry on Tuesday, TASS reports.
"It shall be the policy of the Sri Lankan Government to suspend normal debt servicing of all affected debts for an interim period pending an orderly and consensual restructuring of those obligations in a manner consistent with an economic adjustment program supported by the IMF," the ministry said.
The default has been announced on all outstanding series of bonds issued in the international capital markets, on all bilateral (government-to-government) credits, excluding swap lines between the Central Bank of Sri Lanka and a foreign central bank, as well as all foreign currency-denominated loan agreements or credit facilities with commercial banks or other credit organizations, the statement said.
The country’s government is taking the emergency measures "only as a last resort in order to prevent a further deterioration of the republic’s financial position," the ministry noted.
Ski Lanka is experiencing its worst economic crisis since independence in 1948. It resulted from a contraction of foreign tourism due to the pandemic, which led to the shortage of foreign currency reserves in the country. In this environment the authorities were forced to cut imports and introduce tight resource saving. Moreover, inflation soared to over 17% in March. The country’s external debt, which totals $35 bln, hinders Sri Lanka from making external borrowings and struggling against the economic crisis.
